Op-ed: Apple Store may be shifting from customer experience to profit machine

Apple's retail head John Browett is making changes left and right.

Apple admitted it made a mistake when its new senior VP of retail John Browett slashed staffing levels just ahead of the busy holiday shopping season. But that doesn't necessarily mean Browett won't try to turn Apple's generally well-liked network of retail stores into clones of the near-universally reviled PC World and Curry's chains that Browett managed as CEO of Dixons Retail, according to a new report from ifoAppleStore. And he could be doing it with the full blessing of Apple CEO Tim Cook.

Sources speaking to ifoAppleStore claimed that some of the staffing issues that came to light earlier this month have indeed been reversed. Employees that had been laid off (despite Browett's claim to the contrary) have been rehired. However, overtime hours are still limited, and part-time employees are still only getting the minimum number of hours—as low as 10 per week. Employees that were demoted as part of the "new staffing formula" Browett tried to implement are also not getting their former job titles back.

What's worse, though, is that workshops and training sessions for customers appear to be cut down or eliminated entirely. Spaces devoted to demonstration and training areas are reportedly being filled with shelves for additional accessories, and sales specialists are being directed to increase sales of these miscellaneous items.

Specialist performance will now be directly measured in part by how many accessories they can sell with each hardware item sold. So if you walk in to buy a MacBook Air, the new metrics would encourage sales people to push you to buy cases, hard drives, AirPort base stations, and more. Furthermore, specialists are also reportedly directed to have customers use the iPhone-based EasyPay, though sales through EasyPay don't count toward an employee's metrics—a Catch-22 if I ever heard one.

Apple Stores, like this one in Lincoln Park, Chicago, generally exude cleanliness and order.

To top it all off, even seemingly integral features of the Apple retail experience, such as the stores' generally immaculate cleanliness, may suffer. Store maintenance budgets have been cut, according ifoAppleStore's sources, which could lead to a "grimy and less attractive" store appearance.

When less isn't more

If dirty stores filled with pushy sales people and no added customer service sounds bad to you, I have to agree. If it sounds familiar to you, however, you have probably stepped into one of Dixons' Retail chains in the UK. Ars has received endless first-hand reports from readers in the UK that Dixons stores—in particular the PC World and Curry's chains—have "the epitome of appalling service," and are the "absolute antithesis" of the Apple Store.

"The sales staff jump on you straight away, even if you are just looking, and are very pushy," reader Arron Claydon told Ars in January. "Once you have checked the stock with them, they then try to sell you all of the other rubbish like extended warranties, cases, and even cloud storage. After you have refused this they then just pass you to the till and move on to the next customer."

"If you want a dingy shop full of distracting always-on demonstration units, staffed by surly ignoramuses who only want to sell you an extended warranty, then Dixons is the place to go," Phillip Storry, a systems administrator from London, told Ars. "Which probably explains why Dixons has been having real troubles of late—consumers are now wise to them and shop elsewhere."

(This is just a sampling of the hundreds of comments, e-mails, and tweets expressing similar sentiments Ars has received since Browett was hired in January.)

Long-time Apple customers may be scratching their heads and wondering why Cook chose Browett to take over for former retail chief Ron Johnson, especially given the appalling reputation of Dixons stores under his leadership. Sources for ifoAppleStore believe the answer lies in Cook's focus as an "operations guy." Former Apple CEO Steve Jobs let his design team come up with great ideas, while Cook's job was to make them profitable by focusing relentlessly on the bottom line. Cook seems to be taking the same approach to retail, with a focus on "revenue and profits, not customers."

Johnson, according to some accounts, championed customer experience over profits for Apple's retail stores, and had convinced Jobs that was the right strategy. And given the history of the last decade, I tend to agree: Apple Stores are often considered a gold standard for design and customer service, and generate more revenue per square foot than even high-end stores like Tiffany's, Coach, and Ralph Lauren. (Apple Stores generate $5,626 per square foot, 17 times more than the $341 average for mall stores.)

This is the image of Apple's retail stores that the company has fostered for the past decade.

Despite performing better than most other retail chains, however, Apple's profit margin on retail sales is only about 22 percent. And sales numbers are still dwarfed by online sales and other channels. Cook and Apple CFO Peter Oppenheimer had apparently tried to push Johnson to change that strategy over the last few years, which may have ultimately led to his decision to leave Apple after Jobs' passing last year.

For what it's worth, we don't know for sure if Cook actually wants Apple's retail stores to focus more on profits and less on customer service. "Our retail stores are all about customer service, and John shares that commitment like no one else we've met," Apple CEO Tim Cook said in a statement when Apple announced Browett's appointment as head of retail. But Browett's history at Dixon's suggests otherwise, as do the reported changes being implemented. (Apple did not respond to a request for comment on this topic.)

Given my own experience with the perennially over-crowded stores here in Chicago, I'd argue that increasing staffing and services would be more effective—though admittedly, profit margins might suffer. And while Apple Stores may not contribute as much to the bottom line as Cook might like, the reputation and goodwill they engender are probably worth far more than a few points on a P&L sheet at the end of every quarter.

Promoted Comments

I think it's hilarious that every generation of executives doesn't learn from the mistakes of profit-margin pursuing expense-slashing-happy nutcases of the previous generation.

It's like a business-culture manifestation of Dunning-Kruger Syndrome: these idiots can't even see that they're harming the very businesses that they attempt to make profitable through poor decision-making.

180 Reader Comments

Specialist performance will now be directly measured in part by how many accessories they can sell with each hardware item sold.

Time to sell Apple Stock. All of that bullshit worked AWESOME for BestBuy. I always wondered how long after Steves death Apple would jump the shark. Sure it will coast along for a long time like Microsoft did, but you have to wonder.

Annnnd... here comes the decline. I'm not a huge fan of Apple, but I'd guess that their putting the customer over profits is probably what made them so profitable during their renaissance of the past 12 years or so.

Tim Cook is Tim Cook. He's a process pusher, a bean counter, not a visionary/big picture guy. If he stay on as CEO for much longer, Apple will have a few more good years then is back to 90s' sad shape.

Apple Stores are often considered a gold standard for design and customer service,

In the US, Apple stores rank slightly above average for customer service. That may be considered "gold standard" for some, but for most it is not. FWIW, Apple used to rate much higher but I think it dropped due to other companies upping their game, rather than Apple dropping the ball.

Despite performing better than most other retail chains, however, Apple's profit margin on retail sales is only about 22 percent. And sales numbers are still dwarfed by online sales and other channels.

Not a grammar wizard, but these two lines seem wrong.

I'd agree that Apple stock is overvalued, but I don't think this article indicates anything that would warrant a sell-off. They reversed course pretty quickly on the previous staffing decision, so they are likely to change course on other streamlining decisions that displease customers.

Annnnd... here comes the decline. I'm not a huge fan of Apple, but I'd guess that their putting the customer over profits is probably what made them so profitable during their renaissance of the past 12 years or so.

I am a fan of Apple, and I totally agree. This looks like a beginning of a decline.

Maybe it's just the location but I do not like going into an apple store. Last time I went into one to see if they had any good cases for the iphone 4 i had to push my way to the back past all the people playing with the demo units just to find a confusing and poorly labeled rack of accessories. I quickly realized they were all over-priced anyways and left as soon as I could push through the human wall again. The picture of the emtpy apple store in the story is funny, I think I have only seen that when it is closed. FSM help you if you go there anywhere near the launch of a new product.

There needs to be a stop-word we can use with salespeople if they try to upsell... "Sorry, Cacao.", and then take the receipt ID from that transaction, log onto a website, and send John Browett an email stating "Employee so-and-so deserves a raise, but you, sir, deserve a swift kick in the grunies."

On a side note, why do so many MBA types seem incredibly short-sighted and number driven. Keep the MBAs on the backend operations side, and away from strategic thinking.

It's the Gordon Geckoization of business...every great B-school out there now churns out these. It's not about building healthy sustainable business anymore, it's about coming in, maximizing profits regardless of quality business practices, with little thought for the future, and then getting out when the cash printing machine runs out of ink.

Specialist performance will now be directly measured in part by how many accessories they can sell with each hardware item sold.

Time to sell Apple Stock. All of that bullshit worked AWESOME for BestBuy. I always wondered how long after Steves death Apple would jump the shark. Sure it will coast along for a long time like Microsoft did, but you have to wonder.

I was going to say the same thing. As a former Best Buy employee, if these reports are true, the Apple Stores are going to take a nose dive.

Apple already makes a healthy profit on the machines, their customer-focused atmosphere had been what set them apart, and now they're losing that.

This is why every flash in the pan corporate megasuccess has such a short stay up on the pyramid of greatness. Inevitably they get greedy or bored, or some pathetic combination of both.

Maybe this is what you're looking for:

“I have my own theory about why decline happens at companies like IBM or Microsoft. The company does a great job, innovates and becomes a monopoly or close to it in some field, and then the quality of the product becomes less important. The company starts valuing the great salesmen, because they’re the ones who can move the needle on revenues, not the product engineers and designers. So the salespeople end up running the company.” [Steve Jobs]

"Former Apple CEO Steve Jobs let his design team come up with great ideas, while Cook's job was to make them profitable by focusing relentlessly on the bottom line"Scary. Jobs was all about the design. Screw how much it costs and just run a great store. I always felt that Apple store were like a playground for us to play in. And if I have trouble with my Mac there's a Genius to help me or if I want to learn how to do x on my new machine they'd have classes. Oh yeah, I could buy things too. Win win for the customer. Profits were secondary, because in reality the'd make more money this way. It worked. Now it looks like a company that makes a zillion dollars a day wants more. Sad.

This is why every flash in the pan corporate megasuccess has such a short stay up on the pyramid of greatness. Inevitably they get greedy or bored, or some pathetic combination of both.

Maybe this is what you're looking for:

“I have my own theory about why decline happens at companies like IBM or Microsoft. The company does a great job, innovates and becomes a monopoly or close to it in some field, and then the quality of the product becomes less important. The company starts valuing the great salesmen, because they’re the ones who can move the needle on revenues, not the product engineers and designers. So the salespeople end up running the company.” [Steve Jobs]

Apple Stores are often considered a gold standard for design and customer service,

In the US, Apple stores rank slightly above average for customer service. That may be considered "gold standard" for some, but for most it is not. FWIW, Apple used to rate much higher but I think it dropped due to other companies upping their game, rather than Apple dropping the ball.

My experience was the nearest Apple store is an hour and a half drive away and when we walked in with a Mac Pro, they basically looked at us like we were space aliens. Then after several hours with the device, they think its a bad video card, which happened to be a Quadro 4000, but didn't have any cards in stock and wanted us to come back in a couple days. Of course you can't ship the box to them ahead of time either as that is strictly prohibited, even though it would have saved me a 3 hour drive for something they couldn't fix and had no parts on hand to fix it with. Oh and they ended up being wrong about the video card anyway. Yep, great service.... I'll take Dell pro support anyday of the week and not have to drive anywhere for it.

One can only imagine how the MBAs chaffed and groaned under the cruel whip of a dropout technical design geek during Jobs's long tenure at Apple. It must have caused them untold amounts of suffering watching lines at Apple stores stretch for blocks, full of customers whose Apple Experience was not being converted into revenue via the medium of knick-knacks, dongles and add-on services at a steady clip, customers who spent their time obsessing over the iDevice (MBA term: aWidget) with each other instead of being pelted with confusing pitches from desperate sales staff cavassing the line.

Thank god Jobs is dead, and a pity he didn't die sooner. The MBAs won't just have to make up for lost time, they'll have to work out all their pent-up frustration and anger on their customers, technical staff, and salespeople. Especially the salespeople, who are actually Apple's biggest customers, having bought into the old Apple Experience itself.

I think this would be an awful, awful idea. By focusing on customer experience, you generate profit in the longterm. Why do you think Apple's retail strategy is so successful? Please, please don't let shareholders and MBAs ruin Apple like they ruin basically every other company.

I used to work at an Apple Store. The fact that we weren't paid on commission made a HUGE difference (although they use other metrics to measure performance). If a customer left empty-handed, it was perfectly OK, as long as they left satisfied. Chances are the customer would return and buy something, and/or bring friends/family along.

And while Apple Stores may not contribute as much to the bottom line as Cook might like, the reputation and goodwill they engender are probably worth far more than a few points on a P&L sheet at the end of every quarter.

Kevin G wrote:

DCstewieG wrote:

As the article mentions, they already ARE a profit machine. I just don't get this.

It isn't about profit, it is about investors wanting even more profit than before.

One of the great "benefits" of being a publicly traded company. The points on the P&L sheet are more important than your customers. See only the wireless industry and their driver of decision making, the ARPU. In what world is the thing that increases the average revenue per user the most going to be best for said user? Why would we expect Apple/Microsoft/Google/Samsung/ANY PUBLICLY TRADED COMPANY to be any different?

I think it's hilarious that every generation of executives doesn't learn from the mistakes of profit-margin pursuing expense-slashing-happy nutcases of the previous generation.

It's like a business-culture manifestation of Dunning-Kruger Syndrome: these idiots can't even see that they're harming the very businesses that they attempt to make profitable through poor decision-making.

Apple's formula for success was phenomenal at getting them there. But eventually the whiz kid grows up and has to change tactics; it's just taken Apple a bit longer to get there then a lot of tech companies. It would happen if Jobs was still at the helm or not. And once you have a reputation as a miracle worker, anything you do gets measured by that standard. Not every product can be a success -- if fact, I'd argue if everything you do is a success you aren't trying very hard.

The bloom was going to fade off Apple's rose about now anyway. That doesn't mean Apple will fail or cease to become successful and profitable, it just means Apple, their customers and their stockholders are going to start to measure them a different way. The stockholders, in particular, are going to start to get grumpy if the stock doesn't continue to perform, and short term stock gains are not necessarily good for long term business.

That said, taking a dive off a customer service high cliff like this isn't the way Apple gracefully transitions from whiz kid to mature success. They seem to be taking lessons from Facebook, who is pursuing a similar strategy, instead of blue chip like IBM that's been there.

Oh well. Apple stores always struck me as somewhat anachronistic anyway as brick and mortar retail continues its slow death across all sectors.

That's a pretty trite statement. There are a lot of places that online just can't replace B&M, and user experience is one of them. I'm perfectly willing to buy cards, drives, etc online, but I prefer to be able to see the monitor, feel the mouse and keyboard. That just can't be replicated online.

It would annoy the hell out of me to buy something, sight unseen, then end up returning it over keyboard feel or something.